Slide 1: Q2 2022 Earnings Presentation
Q2 2022 Earnings Presentation August 4, 2022 SPX Corporation 2019 Investor Event - New York
Slide 2: Forward-looking statements
Certain statements contained in this presentation that are not historical facts, including any statements as to future market conditions, results of operations, products introductions, and financial projections, are forward-looking statements within the meaning of Section 27A of the Securities Act
Slide 3: Introductory Comments
Introductory Comments Gene Lowe
Slide 4: Executive Summary – Q2 2022
Executive Summary – Q2 2022 Strong 2Q performance and 2H outlook Robust D&M project bookings Continuing to manage supply challenges Reorganizing corporate legal structure Executed ~$34m of stock repurchases Potential for up to 5-10% of capital allocation Raising full-year 2022 Adjusted
Slide 5: Q2 2022 Results Summary
Q2 2022 Results Summary ($ millions) Q2 2022 Strong organic revenue growth HVAC and Detection & Measurement */ Margin* Solid contribution from acquistions Cincinnati Fan, ECS and ITL Robust profit and margin growth 47% growth in Adj. Operating Income* 220 bps margin* expansion On Track
Slide 6: Value Creation Framework
Value Creation Framework Organic Growth SPX Business System • New products • Policy deployment • Channel expansion • Operational excellence • Adjacent markets • Due diligence/integration Inorganic Growth Culture & Values • Strategic platform focus • Integrity • Significant capital to deploy • Result
Slide 7: Q2 Financial Review
Q2 Financial Review Jamie Harris
Slide 8: Reorganizing Corporate Legal Structure
Reorganizing Corporate Legal Structure New Name No Trading Disruption On or around SPX Technologies, Inc. SPXC / NYSE August 15th Key Benefits Simplified legal structure More efficient management/growth (e.g., M&A) Segregate assets / liabilities of operating businesses from certain legacy liab
Slide 9: Adjusted Earnings Per Share
Adjusted Earnings Per Share Q2 2021 Q2 2022 GAAP EPS from continuing operations $0.38 $0.41 Amortization $0.11 $0.12 Acquisition-related $0.04 $0.01 Non-service pension** $0.00 $0.07 Other† $(0.02) $0.10 Adj EPS from continuing operations* $0.51 $0.71 Q2 2022 Adjusted EPS* of $0.71 * Adjusted result
Slide 10: Adjusted Q2 2022 Results
Adjusted Q2 2022 Results ($ millions) Q2 Adjusted Results: Q2 2022 19.4% year-over-year increase: / * 10.2% organic increase due to higher project revenue in D&M and strong HVAC Heating sales 10.8% acquisition impact (Cincinnati Fan, ECS and ITL) -1.6% currency impact from stronger USD Q2 Ad
Slide 11: Summary Q2 2022 Adjusted Segment Results
Summary Q2 2022 Adjusted Segment Results Q2 2022 Y/Y % Y/Y Change Change in Adjusted Segment Segment in Revenue Income Margin* HVAC 18.0% (140) bps Detection & Measurement 21.7% 420 bps Total SPX 19.4% +70 bps Organic 10.2% Acquisitions 10.8% Currency -1.6% *Adjusted results are non-GAAP financial m
Slide 12: HVAC Q2 2022 Results
HVAC Q2 2022 Results ($ millions) Q2 Revenue: Q2 2022 18.0% year-over-year Increase: / * 8.9% organic increase – Demand remains strong. Growth in heating revenue (price and volume), partially offset by production constraints 9.8% acquisition impact (Cincinnati Fan) -0.7% currency impact (Str
Slide 13: Detection & Measurement Q2 2022 Results
Detection & Measurement Q2 2022 Results ($ millions) Q2 Revenue: Q2 2022 21.7% year-over-year increase: / * 12.4% organic increase due to higher project sales 12.5% acquisition impact (ECS and ITL) -3.2% currency impact from stronger USD Q2 Adjusted Segment Income* and Margin*: $9.7m incre
Slide 14: Financial Position and Liquidity Review
Financial Position and Liquidity Review Jamie Harris
Slide 15: Financial Position - Capital Structure & Liquidity Update
Financial Position - Capital Structure & Liquidity Update ($ millions) ($millions) Q1 2022 Q2 2022 Short-term debt $2 $2 1.5x 1.4x Current maturities of long-term debt 13 13 0.3x Long-term debt 228 225 Total Debt $243 $240 -0.9x Less: Cash on hand (269) ** (195) Net Debt (Cash) $(26) $45 Gross Lever
Slide 16: 2022 Guidance (Updates in Bold)
2022 Guidance (Updates in Bold) Revenue Segment Income Margin $885-$910m (+$25m) ~14.0% HVAC ($855-$890m prior) (14.0-14.5% prior) Detection & $520-$540m (+$13m) 19.0%-21.0% Measurement ($500-$535m prior) (19.0-21.0% prior) $1.41-$1.45B (+$38m) ~16.0-16.5% Total SPX ($1.36-$1.43B prior)
Slide 17: End Market Overview and Closing Remarks
End Market Overview and Closing Remarks Gene Lowe
Slide 18: Market Commentary
Market Commentary Market Comments Cooling: ‒ Continued solid demand in Americas / Asia ‒ Labor constraints moderating Heating: ‒ Demand remains healthy / No material order cancellations ‒ Managing supply chain challenges Run-rate: ‒ Broad strength in Location & Inspection / regional variances
Slide 19: End Market Exposure
End Market Exposure ~$1.4 Billion* (~2/3 Replacement Revenue) Gov’t, Regulated Non-Resi Industrial Residential & Utility 27% 19% 13% 41% Water/Wastewater, 8% Light Mfg. / Other, 4% Utility, 13% Hospitality, 2% Data Center / Lab, 3% Healthcare, 4% Gov't Regulated, Institutional, 12% 21% Office / Reta
Slide 20: Executive Summary
Executive Summary Strong Q2 results Solid demand continues; managing supply chain Increasing full-year 2022 guidance Remain well-positioned for growth Progressing Towards “SPX 2025” Targets August 4, 2022 20
Slide 21: Questions
Questions
Slide 22: Modeling Considerations – Full Year 2022
Modeling Considerations – Full Year 2022 Metric Considerations Corporate expense $48-50m Long-term incentive comp ~$12-13m Restructuring costs $1m Interest cost ~$9m Other income/(expense), and Non-service pension $4-6m benefit/(expense) Tax rate 20-22% Capex ~$15m Cash cost of pension + OPEB $12-13
Slide 23: 2022 Adjusted EPS Guidance - Key Drivers
2022 Adjusted EPS Guidance - Key Drivers • Favorable economic policy/infrastructure stimulus $2.85 • Accelerated project-related sales • Moderating supply chain challenges and input costs $2.78 Base Case • Worsening supply chain challenges and input costs • Delayed project-related sales $2.70 • Unfa
Slide 24: Adjusted Segment Income Phasing and Reconciliations
Adjusted Segment Income Phasing and Reconciliations 34% 31% 23% 23% 23% 22% 24% 21% Q1 Q2 Q3 Q4 2020 2021 August 4, 2022 24
Slide 25: Adjusted SPX Results by Quarter
Adjusted SPX Results by Quarter ($ millions) Q1 Q2 Q3 Q4 2021 Q1 Q2 2022 Segment Income $ 42.3 $ 37.3 $ 32.9 $ 61.4 $ 173.9 $ 30.2 $ 48.1 $ 78.3 Exclude: One time acquisition related costs 0.7 0.9 3.2 0.3 5.1 0.1 0.9 1.0 Exclude: Intangible amortization 4.0 6.5 5.5 5.6 21.6 9.3 7.1 16.4 Adjusted Seg
Slide 26: HVAC Segment Results – 2021-2022
HVAC Segment Results – 2021-2022 ($ millions) Q1 Q2 Q3 Q4 2021 Q1 Q2 2022 Revenue $175.6 $185.4 $179.3 $211.8 $752.1 $193.1 $218.7 $411.8 GAAP Segment Income 22.3 25.9 23.0 33.0 104.2 15.2 25.6 40.8 Exclude: Acquisition related costs - - - 0.1 0.1 - - - Exclude: Intangible amortization 0.7 0.7 0.6 1
Slide 27: D&M Segment Results – 2021-2022
D&M Segment Results – 2021-2022 ($ millions) Q1 Q2 Q3 Q4 2021 Q1 Q2 2022 Revenue $111.6 $111.2 $106.4 $138.2 $467.4 $114.0 $135.3 $249.3 GAAP Segment Income 20.0 11.4 9.9 28.4 69.7 15.0 22.5 37.5 Exclude: Acquisition related costs 0.7 0.9 3.2 0.2 5.0 0.1 0.9 1.0 Exclude: Intangible amortization 3.3
Slide 28: Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2022 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted (millions) (1) Segment income $ 48.1 $ 8.0 $ 56.1 (2) Corporate expense (16.4) 5.1 (11.3) Long-term incentive compensation expense (2.5) - (2.5) Special charges, net (0.1) - (0.1) (3) Other operating expense, net (1.9) 1.9 -
Slide 29: Q2 2021 U.S. GAAP to Adjusted EPS Reconciliation
Q2 2021 U.S. GAAP to Adjusted EPS Reconciliation GAAP Adjustments Adjusted (millions) (1) Segment income $ 37.3 $ 7.4 $ 44.7 (2) Corporate expense (13.6) 1.5 (12.1) Long-term incentive compensation expense (3.3) - (3.3) Special charges, net (0.6) - (0.6) (3) Other operating expense, net (2.7) 2.7 -
Slide 30: U.S. GAAP to Adjusted Operating Income Reconciliation
U.S. GAAP to Adjusted Operating Income Reconciliation Three months ended Six months ended ($ millions) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Operating income $ 27.2 $ 17.1 $ 38.6 $ 42.1 (1) Include - TSA Income 0.9 - 1.8 - Exclude: (2) Acquisition related and other costs (5.1) (2.4) (9
Slide 31: Q2 2022 Non-GAAP Reconciliation - Organic Revenue
Q2 2022 Non-GAAP Reconciliation - Organic Revenue Three months ended July 2, 2022 Detection & HVAC Measurement Consolidated Net Revenue Growth 18.0 % 21.7 % 19.4 % Exclude: Foreign Currency (0.7) % (3.2) % (1.6) % Exclude: Acquisitions 9.8 % 12.5 % 10.8 % Organic Revenue Growth 8.9 % 12.4 % 10.2 % A
Slide 32: U.S. GAAP Adjusted Segment Income Reconciliation
U.S. GAAP Adjusted Segment Income Reconciliation ($ millions) CONSOLIDATED SPX: Three months ended Six months ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Total segment income $ 48.1 $ 37.3 $ 78.3 $ 79.6 (1) Exclude: Acquisition related costs (0.9) (0.9) (1.0) (1.6) (2) Exclude: Amortiz
Slide 33: U.S. GAAP to Adjusted Segment Income Reconciliations
U.S. GAAP to Adjusted Segment Income Reconciliations ($ millions) HVAC REPORTABLE SEGMENT: Three months ended July 2, 2022 July 3, 2021 Segment income $ 25.6 $ 25.9 Exclude: Acquisition related costs - - (2) Exclude: Amortization expense (2.7) (0.7) Adjusted segment income $ 28.3 $ 26.6 as a percent
Slide 34: Q2 2022 Debt Reconciliation
Q2 2022 Debt Reconciliation ($ millions) Q2 2022 Short-term debt $ 2.1 Current maturities of long-term debt 13.0 Long-term debt 224.5 Gross debt 239.6 plus: Adjustments per Senior Credit Agreement(1) (1.2) Adjusted gross debt 238.4 less: cash and equivalents (194.8) Adjusted net debt $ 43.6 (1) Incl
Slide 35: Q2 2022 Consolidated Adjusted EBITDA Reconciliation
Q2 2022 Consolidated Adjusted EBITDA* Reconciliation 12 Months Ended ($ millions) July 2, 2022** Income from continued operations $ 38.5 Income tax provision 9.7 Interest expense 10.4 Depreciation and amortization 48.1 EBITDA 106.7 Adjustments: (Gains)/Losses on disposition of assets outside the ord
Slide 36: Q2 2022 Adjusted Free Cash Flow Reconciliation
Q2 2022 Adjusted Free Cash Flow Reconciliation ($ millions) Three Months Ended July 2, 2022 Operating cash used in continuing operations $ (34.9) Capital Expenditures (3.9) Free Cashflow used in continuing Operations (38.8) Adjustment* 44.6 Adjusted free cash flow from continiuing operations $ 5.8 *